Advancements in AI have the potential to shape the future of international arbitration, though growing concerns over security and transparency have prompted calls for heightened oversight, according to Freshfields’ 2025 International Arbitration Report.

The report – now in its 10th edition – highlights the 12 key trends impacting the arbitration landscape this year, with AI top of the list. The firm also flagged geopolitics, Russian disputes, investor-state mediation, human rights issues in investment treaty arbitration, and growing environmental, social and governance (ESG) demands as drivers of change in international arbitration.

Boris Kasolowsky, global co-head of international arbitration, underscored the complexities shown by the report facing business, while Noiana Marigo, his fellow global co-head, agreed, saying: “We have gone beyond observation to provide actionable guidance [in the report] for businesses facing complex challenges.”

Integrating AI into international arbitration stands out among the trends identified, noting that significant AI breakthroughs in 2024 have expanded its adoption among arbitrators and advocates. However, there are calls for more oversight to ensure AI is used responsibly.

Geopolitical shifts also feature prominently, with investment claims expected to be significantly influenced by recent political developments. Key factors include new administrations in Mexico – which proposed sweeping reforms to its judiciary – as well as the Trump Administration in the US, the ongoing conflict in Ukraine and China’s evolving trade and foreign investment policies.

Russian disputes and the role of state courts in arbitration are also highlighted. In 2024, national court intervention in arbitration intensified, particularly concerning disputes involving sanctioned Russian companies.

The UK, Hong Kong and Germany saw increased anti-suit injunctions and declaratory relief supporting arbitration, with cases litigated to the appellate level. Concurrently, Russian courts issued anti-arbitration and anti-anti-suit injunctions, another trend likely to continue in 2025.

Noah Rubins KC noted: “In an era of heightened court involvement, understanding your opponent’s global assets is essential. Where the opposing party conducts business outside Russia, European counterparties may increasingly consider offensive steps to pressure parties breaching the arbitration agreement.”

Another emerging trend is the increasing use of mediation in investor-state dispute resolution, as noted by the Lady Chief Justice at LIDW 2025.

The report suggests mediation is a promising alternative, with criticisms of investor-state dispute settlement (ISDS) growing due to high costs, lengthy proceedings, entrenched positions between states and businesses, and civil society concerns.

Criticisms of ISDS are not new; the 2020 report highlighted reforms to ISDS, which are now being implemented, focusing on the backlash against the status quo and the rise of standing investment courts.

Caroline Thomas noted that human rights and social issues are also becoming more central to investment treaty arbitration, particularly concerning indigenous rights.

She said: “Increasingly, we’re seeing social and human rights issues – such as the concept of ‘social license to operate’ or prior consultation rights – raised in investment treaty disputes.

“As investors navigate more stringent, domestic regulatory landscapes and evolving international soft law, they must consider the implications of social issues under investment protection regimes.”

Natural resource, energy and infrastructure projects often intersect with local communities, increasing scrutiny in investor-state disputes. Some newer investment treaties explicitly address these social and human rights issues, a trend expected to continue.

The report also anticipates a rise in disputes from private equity deals. It argues that a significant backlog of failed exits from deals signed in recent years will drive more investors to arbitration, as will emerging disputes arising from the growing secondaries market.

Finally, the report addresses sectoral developments, such as arbitration for space disputes, sports disputes and the procedural challenges of applying uniform privilege rules. It also notes the rising popularity of Engineering, Procurement and Construction Management (EPCM) contract structures in construction disputes.

Ahead of Riyadh International Arbitration Week, it reported on the Saudi Center for Commercial Arbitration, while discussing the continuing impact of the dissolution of the former DIFC-LCIA Arbitration Centre.

Some themes are pervasive; five years ago, geopolitical instability was also a chief concern. Once novel trends have also become established following the pandemic, including the shift to virtual hearings, especially in procedural hearings.

Another established theme is promoting greater diversity in arbitration, including gender diversity, which Freshfields has supported. 

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